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Capital and Business Structure

Capital: 1) Is there other ways to build for startup capital other than
asking friends and family or borrowing from retirement before going to the
banks for help? Is it possible to do fundraisers and or local events that
help raise money for a small business?
Business Structure: 2)If you start out a business as a sole proprietorship
can you eventually change the structure as the business grows to an LLC etc?

BusinessLawyer | Window Shopper |
8/20/2013 - 7:43 pm

Selecting a business structure is a very important decision that can greatly
affect your business. Below is a general idea of the different structures.
Business entities are creatures of state law and every state is different.
You should always consult with a business attorney and an accountant.

A sole proprietorship is owned by one person and there is no legal
distinction between the owner and the business. All profits and losses are
accrued to the owner, and subject to taxation. In a partnership, owners share
the profits and losses associated with the business. Corporations are the
most common form of business organization. It's given legal rights as a
separate entity from its owner, thus keeping its owner from being liable if
the company is sued. Corporations are owned by a group of people known as
shareholders. An S Corporation is similar to a corporation, in that business
owners have limited liability in the company. However, S corporations
generally do not pay income taxes, but rather, the business' income or losses
are passed along to shareholders. A Limited Liability Company (LLC) is the
hybrid of a sole proprietorship and a corporation. Like a corporation, the
owners of an LLC have limited liability, but is also shares the pass-through
taxation of a sole proprietorship or partnership (meaning, if you own an LLC,
you are only taxed once for your business).

BizResearcher | Window Shopper |
1/23/2013 - 11:38 am

You would not be able to hold fundraisers to finance a for-profit business.
Only non-profits can do that. If you start as a sole proprietorship, you
change the structure by filing the required forms with your state or county.

JGabriel | Community Moderator |
1/22/2013 - 3:32 pm

SBA has resource partners like SCORE, Women&rsquo;s Business Centers and Small Business Development Centers located across the country that provide free business counseling to individuals looking to start or expand a small business. Visit our local assistance guide to find your local SBA resource partners by entering your zip code. This blog can help shed some light on changing your business structure.